If you sometimes feel like your head is spinning when you’re confronted with all of the insurance-related terms you have to know for your tow truck business, don’t worry – you’re not alone. With all the different types of tow truck insurance out there, not to mention all the fancy insurance words, it can get overwhelming. One of those buzzwords you might have been wondering about is deductible. Maybe you’ve been wondering what exactly a deductible is and why people make a big deal about it. We’ll give the definition of deductible and go over what it means. Even better, we’ll explain how it can affect your tow truck insurance rates.
Definition of deductible:
Your deductible is the amount you agree to pay if you have a claim. Basically, if you have a claim, you’re responsible for paying your part of the bill and the insurance company is responsible for paying theirs.
How does my deductible affect the cost of my tow truck insurance?
Here’s the thing about deductibles – you can usually choose the amount and set it where you want it (based on options the insurance company will give.) So, at first glance, it may seem like a great idea to set it pretty low. Paying $1,000 sounds better than paying $1,500 right? But there’s something you have to consider – the higher you set your deductible, the lower your tow truck insurance premiums could be.
The reason for that is because you’re accepting more risk and you’re less likely to file a claim. So, saving money on tow truck insurance sounds like a pretty great deal. But you have to consider how much your business can comfortably afford to pay if you have a claim. You don’t want to set your deductible so high that it would be financially burdensome for your business to pay. So, as you can see, it’s a balancing act. You have to evaluate your business’s financial situation. If you think that you could stand to raise your deductible, you could save money on your tow truck insurance. You just don’t want to raise it to be too high.
Pro tip: Familiarize yourself with what to do if you’re in an accident so that you’re prepared if you ever get into a wreck while on the job.
How does my deductible affect when I should file a claim?
If you have a higher deductible, chances are you’ll be less likely to file a small claim. First of all, you wouldn’t file a claim for an amount that’s less than your deductible – that’s not going to help you. Second, if the loss is only slightly more than your deductible, you may want to just cover the entire loss yourself to avoid having a claim and possibly getting higher tow truck insurance rates.
Okay, let’s illustrate – let’s say there’s a tow truck business that has a $1,500 deductible. One of their tow trucks rolls into a tree. Hey, accidents happen. The tree’s fine – lucky tree. The tow truck? Well, it wasn’t so lucky. The damage comes to $1,800. Now, as long as the business has insurance that will cover smashing into trees on accident, they could file the claim and get their $300 (remember, they would have to pay $1,500 as their portion of the claim.) However, the business owner decides to pay for the repairs out of pocket – they’re already out $1,500, and they don’t want their insurance rates to go up because they filed too many small claims.
Anyways, the point is that your deductible can help you determine when to file an insurance claim.
In the end, it’s important to choose the deductible that’s right for your business. While choosing a high deductible can help you save money on your premiums, you don’t want to set one that’s unrealistic for you to pay if you had a claim.
Are you looking to save money on your tow truck insurance rates? We can help. We can help you shop for the best possible rates for your insurance. Our goal is to help tow truck businesses like yours save money on their tow truck insurance. All you have to do to get tow truck insurance quotes is fill out our online form or give us a call today. Our team is happy to help.